MTR Gaming: Poker Up, Income Down

Play at poker tables in their first few weeks of operation at Mountaineer Race Track & Gaming Resort has exceeded expectations, and officials with track owner MTR Gaming Group said it’s a start toward reinventing the facility and improving its bottom line.

The first 37 poker tables opened Oct. 19 on the first floor of the grandstand/clubhouse; demand has been such that Mountaineer plans to add four more tables in the near future. During a Nov. 8 conference call on MTR Gaming’s third-quarter earnings, officials said the daily win per unit in November is running at $688, up from $560 in October.

Officials said they had hoped for a daily win per unit of $500.

“Our play has been above what we expected,” MTR Gaming president Edson “Ted” Arneault said during the call. “We’re looking at penetrating a whole new target market--people ages 50 and under. (Table games) provide access to a whole new demographic.”

Table games received approval by the state legislature and county voters earlier this year. About 50 other tables for games such as blackjack, craps, and roulette will be ready for use by January 2008, officials said. Those games will be located in Mountaineer’s main gaming/hotel complex, which houses most of the track’s video lottery terminals.

The poker room is located adjacent Mountaineer’s new simulcast area in the grandstand. Track officials have said they hope there is some synergy between poker and horse racing, which is offered year-round.

Arneault, prominently featured in the track’s advertising, said Mountaineer plans to launch a new campaign geared toward the facility’s expanded offerings rather than just thousands of VLTs. “It will be racy, edgy advertising geared toward a younger crowd,” he said.

Revenue from table games is less than that of slot machines or video gaming devices, but Arneault has said the new games will attract more people and allow Mountaineer to grow into more of a destination and allow it to compete with Pennsylvania slots parlors.

The benefits to horsemen won’t be as apparent as they were when VLTs were legalized at Mountaineer. Purses will get 2.5% of table games revenue and breed development 2%; purses get 14% from VLT revenue and breed development 1.5%.

Horsemen at the track supported the referendum on table games in the hope the added features would also drive VLT traffic and revenue. They also offered support in exchange for a commitment by the track to work toward installing a synthetic surface. Arneault confirmed that earlier this year but said he first wanted to see how the synthetic Tapeta Footings surface performs at the company’s Presque Isle Downs near Erie, Pa.

MTR Gaming reported a net loss of $2.8 million in the third quarter of 2007 and the first nine months of this year. For the third quarter and first nine months of 2006, the company reported net income of $103,000 and $3.9 million, respectively.

Net revenue increased 41% to $118.6 million in the third quarter of this year, thanks in part to Presque Isle, which produced $46.7 million in revenue for the quarter. (The racing and slot-machine facility wasn’t operational in the third quarter of 2006.) Analysts on the call questioned the low profit margin at Presque Isle, but Arneault said it could be back in the 20%-25% range next year “after a period of normalized operations” that will include a 100-day racing season.

Mountaineer, meanwhile, suffered a decline in revenue for the third quarter because of competition from a new racetrack slots parlor in neighboring western Pennsylvania. Mountaineer net revenue for the third quarter was $67 million, down from $78.6 million for the same period in 2006.

Officials said other reasons for the decline in revenue were a $900,000 marketing campaign and $600,000 in expenses related to implementation of table games this year.

Mountaineer is located about 45 minutes north of Wheeling Island Racetrack & Gaming Center, a West Virginia Greyhound track with VLT and table gaming.